Forbes India 30 Under 30 2023

R. C. Jain: Can't Treat Contract Labour Unfairly

RC Jain, former group vice-chairman, Eicher, tells Forbes India that the manufacturing industry needs to change its communication with workers to prevent another Manesar

Published: Jul 31, 2012 06:42:29 AM IST
Updated: Aug 6, 2012 04:11:37 PM IST
R. C. Jain: Can't Treat Contract Labour Unfairly
Image: Amit Verma

Ramesh C Jain
Designation: Chairman, Industrial relations task force, CII and Former group vice chairman of Eicher
Career: Mr. Jain is the former group vice chairman of Eicher and throughout his career he has held several top positions in CII’s industrial relations committees. Currently, he is working as an independent consultant and serves as director on boards of several companies like Hi-Tech Gears, Minda SAI and Graziano among others
Education: B.Tech (Hons) from IIT Kharagpur and M. Sc. (business administration) from Cranfield University, UK
Interests: Golf

Q: Were you surprised by the violence at Maruti’s Manesar plant?
Oh, I was absolutely surprised. While we all know that a year ago Maruti workers had issues with registration of their union but whatever we understood is that most of the issues were sorted out. As a matter of fact, I listened to their HR general manager in one of the conferences on industrial relations, and when I heard his presentations, it looked to me as if everything in Maruti is hunky dory. The communication initiative, grievance cell…it was so much from the book that nothing should have gone wrong. Obviously, now I can see that there is a difference between the ground realities and what the top management seemed to be discussing in the boardrooms. I think there is a huge communication gap between the first level of supervision and the top management.

Q: So how do you read the situation?
I understand that the Manesar union consists of very young people. I see that they lack maturity of a good union leader which is expected out of union leaders of any big company. Unions have the right to demand whatever they want and they negotiate very hard but ultimately it has to be a win-win situation. I also have a feeling that somewhere the external leadership, the senior people at trade unions which are at national level, I don’t think they are doing their bit in terms of mentoring the younger leaders. They must train them on their rights, duties and responsibilities. So while they have a right to demand, they have certain duties and responsibilities towards the companies in which they work in.

I think there has been a breakdown in the process of how to handle grievances and employee engagement. Supervisors should be the first ones to know the grievances of the workers even before a union does. And these should be escalated which should result in the formulation of a strategy.

Q: What is you view on contract labour? We understand that is a big issue in almost all manufacturing companies now?
Yes that is an issue. Let me first say that I am not against contract labour. Because there are fluctuations in the business cycle of a company. There has to be a way out in which you have to have a permanent workforce which is adequate to produce normal market demand. And you need a temporary workforce which meets the peaks of 20-30 percent growth rates. But that does not mean that you should treat the contract labour unfairly in terms of compensation, working conditions or what have you in terms of facilities for a permanent worker. In my mind, the flexibility premium which organizations enjoy should be paid out in compensation to temporary workforce. Obviously quite a few companies are not doing this today. If companies believe they can cut costs in this manner, I don’t think that is a fair thing to do. Managements have to learn how to handle the contract labour.

Q: What in your view is a solution to this issue of permanent workers Vs contract workers?
The Industrial Disputes Act, Section 5 B does not allow any company to either close or undergo any retrenchment. If you recall in 2001, the finance minister in his budget speech mentioned that they are going to change this clause. He said that the cut off from 100 persons will be increased to 1, 000 persons and retrenchment allowance which is about 15 days for every year of service would be increased to 45 days. I think this is something where a tripartite discussion can take place. That flexibility to retrench and add manpower should be there. I think somewhere we need to change the focus from job protection of a few to enhancement of jobs for many.

Q: What are the takeaways from this incident?
Good practices on employee engagement and communication is top priority. This should cover welfare, grievances, product line issues…everything. Second is training for supervisors and union leaders. Third is, we need a pro active labour department who do not take their role as going and inspecting companies and auditing labour unions and the antecedents of their leaders very seriously. Fourth is reforms in labour laws; every law is old. Factories Act is as old as 1948, contract labour act is as old as 1947, trade union act is as old as 1926, Industrial Disputes Act is 1947…each of these acts need modifications. I am not saying that changing the acts alone will change the culture. Education and training should happen and Acts are there to aid it.

Q: The last five years have seen increasing number of such incidents and mostly in the automobile sector. Why?
Somewhere we thought that with the service sector, trade unions had taken a back seat. But in the last few years the manufacturing sector has again starting seeing light of day, and the growth in the automobile sector is the most visible, which is why you are seeing many more incidents. But the fact is that in this country there are only 10 percent workers in the organized sector who have a union. 90 percent are not unionized at all, what about them? How do they resolve their problems? I think this is a million dollar question for our country.

Check out our Festive offers upto Rs.1000/- off website prices on subscriptions + Gift card worth Rs 500/- from Click here to know more.

Post Your Comment
Required, will not be published
All comments are moderated
  • Anil Kaushik

    Rightly diagnosed the basic Issue. What has created problems in Employee relations arena is using the contract labour as cost effective measure apart from hanging a sword of job insecurity on such a increasing workforce . This two side attack on their existence, specially when they have understood that industry can\'t be run without them, has pushed them on the wall.

    on Aug 13, 2012
  • K Ramkumar

    The Violence at Maruti and the killing of Awanish, has exposed the selfish side of many of our corporate leaders, Industry bodies and professional bodies. I am aghast at the response of CII and National HRD network in particular. These are custodians of the well being of its members. Their response to date, at best can be described as pedantic and forgetful. The took a week to condole the death of Awanish and condoled it impersonally. Then the President of CII came out and made an insipid and forgetful ritualistic murmur, to pass it off as a condemnation. They in a lethargic manner picked up a panel discussion in one of the TV channels, which was more like an MBA class discussion. I wrote to close to 30 business leaders, the CII president, the Secretary General of the CII and a couple of other senior CII functionaries. The responded to me in a disdainful silence. Only 4 Business leaders, Mr.. Kamath. Mr. Krishnakumar. Mr. Premji and Mr. Keki Dadi Seth had the humanness to respond and exhort the CII for some meaning ful action. Their exhortion too fell on to deaf ears.To this day CII or the NHRDN has done nothing worthwhile. But they can still redeem themselves, by leading a delegation to the Haryana CM and the Indian PM. But if it happens at its sweet time, CII will be no different to the lethargy which Governments normally display. How will CII ensure that the investigations are carried out properly and bring the guilty to book? As an Industry body if CII and NHRDN does not do this what are they for? If CII does not convene a round table of Industry leaders, central trade union leaders and the labor department officials soon, and forge together a joint charter for inequity and violence free work place, they would have missed the bus and would have paved the way for the issue to drift. It is irritating to say the least when these leaders come on TV or issue press statements rationalising the violence and the killing with their social divide theory. My argument is not that there is no social divide, but no divide social, communal or castiest divide justifies violence and killing.\" Regards Ram

    on Aug 6, 2012
  • Dhrao

    This is all ac room talks with no pratical out look. The Manesar problem was law and order problem not IR problem

    on Jul 31, 2012
    • Anshul

      Dhrao, It was a law and order problem but generated due to IR issues. no doubt the attack was pre-mediated and organised but there has to be some reason behind this. And its people who work under Japanese and Koreans understand the extreme pressures and high expectations.

      on Aug 4, 2012